AboutWire rodThe price difference of wire rods is generally influenced by many factors. From the price difference between the two over the past three years, it can be seen that the price of drawn wire has been lower than that of rebar for a long time, which is a true reflection of cost and demand to some extent. Below, I will elaborate on this in detail.

1. Reasons for the change in price difference

1. Cost factors

As one of the lowest-end varieties of industrial wire, the production and rolling requirements of drawn wire are lower than those of rebar, resulting in relatively low rolling costs. Moreover, due to the increasing quality requirements for construction steel by the state, after the implementation of the new standards for construction steel, the alloy costs required for rebar are also higher than those for drawn wire. Therefore, overall, the production cost of rebar is significantly higher than that of drawn wire. Due to production process reasons, currently, major special steel mills in East China, such as Shayang, are basically not producing ordinary Q series drawn wire, mainly producing cold heading steel and other relatively high-end industrial wire to increase the added value of their products. Currently, the Q series drawn wire in East China mainly comes from steel mills in northern regions such as Jiujiang.

2. Demand factors

There are significant differences between the users of drawn wire and rebar. Drawn wire, as one of the important industrial materials, is closely related to the manufacturing industry, while rebar is closely linked to construction as a major type of construction steel. Before the end of 2020, the price of rebar was always higher than that of drawn wire. After entering 2021, the price of drawn wire continued to rise, while the price of rebar adjusted with the building materials prices, leading to a situation where the price of drawn wire was higher than that of rebar. Tracing back the reasons, with the domestic epidemic being basically controlled, domestic manufacturing production fully recovered, and after the improvement of the epidemic situation abroad, especially in Europe and the United States, demand fully recovered, which greatly boosted domestic demand and increased the export volume of manufacturing products, leading to a significant rise in demand for industrial materials. At the same time, the demand for construction steel entered a seasonal off-peak period, resulting in a decline in demand. Under the influence of different demands, the price of drawn wire remained strong, while rebar adjusted, causing the price difference to change against the trend, and this has continued to this day.

2. Impacts of the price difference

1. Production and supply aspects

Currently, the overall price shows a trend of higher prices in the north and lower prices in the south, which is more evident in construction steel. Therefore, the price difference will inevitably lead steel mills to adjust their production plans, increasing the production of industrial wire and reducing the market supply of rebar to maximize profits. It can be foreseen that the arrival of rebar resources dominated by Jiachang and Jiujiang in the southern region may continue to decrease, while the resources of industrial wire remain relatively stable.

2. Price trend aspects

Under the current circumstances, steel mills in East China may further reduce the supply of rebar, leading to a continued compression of the market supply of rebar. At the same time, due to the price difference between the north and south, the supply of rebar resources in the north has already been significantly reduced compared to previous years, and the subsequent supply of rebar may show a tighter situation. Therefore, the current price difference between drawn wire and rebar may further widen, and may even change the state of the price difference.

Overall,Wire rodthe change in price difference is mainly influenced by demand. Changes in demand lead to changes in the price difference relationship, which in turn leads steel mills to adjust their production plans, change market supply relationships, and further drive changes in the price difference, ultimately reaching a relatively reasonable situation. Therefore, if you want to buy wire rods that are more suitable for you and save costs, feel free to consult us.

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